Question

Sean is a divorce attorney who practices law in Philadelphia. He wants to join the American Divorce Lawyers Association (ADLA), a professional organization for divorce attorneys. The membership dues for the ADLA are $600 per year and must be paid at the beginning of each year. For instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also has an option for members to buy a lifetime membership today for $5,000 and never have to pay annual membership dues.

Obviously, the lifetime membership isn’t a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it’s a great deal. Suppose that the appropriate annual interest rate is 7.4%. What is the minimum number of years that Sean must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying $600 in annual membership dues? (Note: Round your answer up to the nearest year.)

12 years

17 years

19 years

21 years

In 1626, Dutchman Peter Minuit purchased Manhattan Island from a local Native American tribe. Historians estimate that the price he paid for the island was about $24 worth of goods, including beads, trinkets, cloth, kettles, and axe heads. Many people find it laughable that Manhattan Island would be sold for $24, but you need to consider the future value (FV) of that price in more current times. If the $24 purchase price could have been invested at a 4.50% annual interest rate, what is its value as of 2017 (391 years later)?

$608,274,670.63

$715,617,259.56

$822,959,848.49

$944,614,782.62

Please show steps please (learning for exam tomorrow)

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

NEED HELP WITH FINANCIAL CALCULATOR, LET ME KNOW

121 e 39 dx 0823 ENG 170120204 10350 X V fx IN OP QIR IS IT IU IV W X Y Z 335 336 337 338 MEMBERSHIP 340 ANNUITY DUE 342 343 PRESENT VALUE RATE ANNUAL PAYMENT NO OF YEARS 344 345 346 5000 7.40% 600 11.96 (ENPER(1Q343,-10344,10342,,1)] 347 NO OF YEARS 12 [rounded] 348 349 350 351 352 353 354 355 356 357 358 359 360 361 ... pv, fv, annuity CAP STRU VALUE PM, PMT loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPO NPER APR CPI ear PVA pva 2 53 STATE 56 57 58 ... 6

1 A e B 9 v dx 9 0825 ENG 17 01 20004 x for IKL IM IN 10P Q R S T U V IVA 10362 2 349 350 351 352 future value of lumpsum 353 354 355 PV 24 YEARS RATE FUTURE VALUE 391 4.50% 715617259.56 (=FV(1Q357,10356,,-19355)) 356 357 358 359 360 361 362 363 364 365 366 367 369 370 371 372 373 374 375 275 pv, fv, annuity CAP STRU VALUE PM, PMT loan wilh points | LOCK BOX DILUTION | DOLLAR COST AVG | EXPO NPER APR CPI eat PVA pva 2 3 STATE 56 | 57 | 58 ... :